Denison Culture Model: Overview
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The Denison Culture Model is a way of looking at an organization to identify, codify and understand organizational culture. This overview sums up the model.
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Denison Culture Model: Overview
- 2. What is Culture? “The way we do things around here” “Lessons learned that are important to pass on to the next generation” “Software of the mind” that organized the behavior of people “What we do when no one is looking” How do you bring clarity to a deep and complex subject?
- 4. Adaptability Pattern..Trends.. Market Translating the demands of the business environment into action “Are we listening to the marketplace?” Mission Direction..Purpose.. Blueprint Defining a meaningful long-term direction for the Company “Do we know where we are going?” Involvement Commitment ... Ownership … Responsibility Building human capability, ownership, and responsibility “Are our people aligned and engaged?“ Consistency Systems… Structures… Processes Defining the values and systems that are the basis of a strong culture “Does our system create leverage?” What Counts… All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 5. Flexible and Stable Flexible Adaptability + Involvement A flexible organization has the capability to change in response to the environment Stable Mission + Consistency A stable orientation contributes to an organization’s capability to remain focused and predictable over time All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 6. External Focus and Internal Focus External Focus: Adaptability + Mission The organization’s focus is on adapting and changing in response to the external environment Internal Focus: Involvement + Consistency The organization’s focus is on the dynamics of the internal integration of systems, structures, and processes All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 7. Dynamic Tensions Top-Down; Bottom-Up: Mission + Involvement Linking purpose, direction and goals to a shared sense of responsibility, ownership, and commitment by employees Stimulate Progress; Preserve the Core Adaptability+ Consistency Balance dual challenges of external adaptation and internal integration All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 8. The Link to Performance
- 9. Profitability ROI, ROS, ROE Innovation & Customer Satisfaction Quality Employee Satisfaction Sales Growth Market Share The Link to Performance
- 11. Key Organizational Performance Metrics Performance Drivers from the Denison Organizational Culture Model Return on Assets Sales Growth Market Share Customer Satisfaction Employee Satisfaction Innovation Dynamic Tensions Flexible vs. Stable Stable Flexible Flexible Flexible Stable Flexible Internal vs. External Internal External External External Internal External Top 2 Culture Traits Mission Mission Mission Adaptability Involvement Adaptability Consistency Adaptability Adaptability* Consistency Consistency Mission Top 3 Culture Indexes Strategic Direction & Intent Strategic Direction & Intent Strategic Direction & Intent Customer Focus Empowerment Customer Focus* Agreement Vision Goal Orientation Coordination & Integration Capability Development Organizational Learning* Vision Creating Change Capability Development Empowerment Core Values Creating Change* Notes: * = additional culture Traits/Indexes not listed followed closely in relative importance. The table focuses attention on the strongest culture-performance linkages within the Denison model. Our research also demonstrates that the most effective organizations have a balanced profile with culture strengths reflected in all parts of the Denison Model. Link to Performance Research Summary
- 12. Impact on Performance Return-on-Assets 2.3% Sales Growth 1.4% Market-to-Book Ratio 2.6 Return-on-Assets 3.2% Sales Growth 23.1% Market-to-Book Ratio 4.0 A sample of 130 public organizations surveyed between 2000-2010 shows that organizations with higher culture scores have greater profitability, sales growth and market-to-book ratio than organizations with lower culture scores. Top 25 orgsBottom 25 orgs All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 13. • Study of Automotive Service Centers in the USA • Total of 338 dealerships and over 12,000 employees • Compares organizational culture and customer satisfaction Satisfying Your Customers Below 50% Highly Satisfied Above 80% Highly Satisfied All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 14. Culture and Innovation New Product Development 22nd Percentile New Product Development 69th Percentile From a sample of 350 client organizations All content and images Copyright © 2010 Denison Consulting, LLC. All Rights Reserved.
- 15. Culture and Innovation Market Value Attributed to Future Growth 26% Market Value Attributed to Future Growth 65% From a sample of 118 publicly traded organizations All content and images Copyright © 2010 Denison Consulting, LLC. All Rights Reserved.
- 16. 931 companies in 48 Countries 50% of the respondents in the last 5 years are from outside the US Headquarter Distribution 28% are Multi-Nationals 75% North American, 14% Europe, 5% Asia/Pacific, 2% Africa/Middle East, 2% Central & South America, 2% Australia/Oceania Wide classification of industries using the North American Industry Classification System (NAICS) 2011 Global Benchmark All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 17. Sample Report
- 22. Denison Leadership Development Survey Helps managers and leaders to: Align culture and leadership to support business performance improvement Identify specific areas of strength and weakness, and establish action plans for individual development Learn how specific management skills and practices impact leadership performance Understand their roles in creating a high- performance culture in their organizations All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 23. Denison Leadership Model All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
- 24. Leadership Global Benchmark 11,953 leaders included in the normative database (up from 8,651) From over 800 companies and rated by over 184,000 bosses, peers, and direct reports Wide variety of industries, job function, management level, and tenure represented Benchmarks are stable across years All content and images Copyright © 2011 Denison Consulting, LLC. All Rights Reserved.
Editor's Notes
- Say: Let’s take a few moments to go over the Denison Model.
- Say: The Denison Model answers four key questions about our organization: Mission – Do we know where we are going? Involvement – Are our people aligned and engaged? Adaptability – Are we listening to the marketplace? Consistency – Do we have the systems and processes in place to create leverage? Each Trait (Mission, Involvement, Adaptability, Consistency) is further broken down in to 3 indexes. (additional detail if needed) Mission High Performing organizations have a Mission that tells employees WHY they are doing the work they do, and how the work they do each day contributes to the WHY. Vision is the ultimate reason you are in business – what you are ultimately trying to achieve. Strategic Direction refers to the 2 - 3 year strategies – high priorities established to ‘operationalize’ the vision. Goals and Objectives are the short-term, specific goals established that help every employee see how his/her work connects to the vision & the strategy. Adaptability High performing organizations are Adaptive – they look for new and better ways to do their work. They welcome new ideas and are willing to try new approaches to doing things. They see Creating Change as an important part of the way they do business. Consumer Focus is critical. Employees recognize that they are in business to serve their customer – both internal & external. They continually look for new and improved ways to meet and exceed customer expectations. ‘Calculated’ risk taking is encouraged. Organizational Learning means we gain knowledge from successes and failures. Involvement High performing organizations encourage and support employee Involvement. They clarify those areas where employees can make decisions, have input, or those areas that are beyond an employee’s scope of responsibility. This promotes ‘informed’ Empowerment. Teamwork is encouraged so that creative ideas are captured and employees support one another in accomplishing the work that needs to get done. Capability Development is practiced in a variety of ways, including training, coaching, and giving employees exposure to new roles and responsibilities. Consistency All high-performing companies do some things Consistently well. Specifically, they have a clear set of Core Values that help employees and leaders make decisions and set priorities. By engaging in dialogue and getting multiple perspectives on the table they are able to reach Agreement when difficult issues and problems arise. Employees understand how the work that they do impacts others – and how other’s work impacts them. They do not just ‘throw things over the fence’. They make sure that work is Coordinated and Integrated to serve the organization as a whole.
- Say: You’ll also notice that you can cut the model into hemispheres. First, Flexible and Stable. Adaptability and Involvement make up the Flexible side of the model. Organizations that are strong in these traits typically change quickly in response to their environment. Mission and Consistency make up the Stable side. Stable organizations are typically very focused and predictable.
- Say: The Model also splits by top and bottom. Adaptability and Mission make up the External Focus. Organizations that are strong in these two traits are focused on the outside environment. They typically have a good eye for the market and are able to adapt and change to the external environment. Organizations that have a strong internal focus rate high in the Involvement and Consistency traits. Their focus is on the internal systems, processes and people of the organization.
- These slides describe the link between organizational culture and bottom-line performance. Based on their overall culture results, the top and bottom organizations were taken from a database of 130 organizations from the years 2000 to 2010. The financial performance of these two groups were compared. The 25 top-scoring firms enjoyed greater sales growth and market value than the bottom 25 organizations. ROA: The top 25 organizations are earning almost $1 more on every $100 spent on assets. Sales Growth: Top-scoring organizations displayed over a 20% difference in sales growth when compared to the bottom-scoring organizations. Market-to-Book: The market value of top-scoring firms are on average worth 4 times more than their book value. Firms with higher-scoring cultures are creating more value in the marketplace.
- Say: Let’s take a quick look at some specific studies. In this study, they looked at customer satisfaction scores in 338 US automotive service dealerships. They compared the culture scores of those dealerships who received customer satisfaction scores of below 50% highly satisfied to those dealerships scoring above 80% highly satisfied. Those dealerships with the higher culture scores were also the ones with the higher levels of customer satisfaction.
- Innovation is defined as the successful implementation of creative ideas within an organization. To find the link between Innovation and Organizational Culture, researchers compared New Product Development ratings to Denison Organizational Culture Survey ratings. Based on a sample of 350 organizations, low performing cultures had an average NPD score at the 22nd percentile, whereas high performing cultures scored at the 69th percentile. Notes: Research Note – Organizational Culture and Innovation: Understanding the Link
- So now that we know a high performing culture correlates with more product development, how does it affect an organization’s market value? A sample of 118 publicly traded organizations was used to compare organizational culture and the expectations of an organization’s future growth. Expectations of future growth were measured by growth assumptions of the organization’s stock price (market value – steady-state value = growth assumption). Notes: Research Note – Organizational Culture and Innovation: Understanding the Link
- Say: Once you’ve taken the survey, we compare your results to our normative database of over 900 other organizations. This database is drawn from the over 5000 organizations that have used the survey and is updated regularly. It includes a wide variety of industries and organizations from various geographic locations. Over 100K of the respondents come from outside the US so there is a good representation of a global respondent group. If we take a look at Headquarter Distribution: 28% of the organizations are multi-nationals 75% are headquartered in North America 14% in Europe 5% Asia/Pacific And 2% each in Africa/Middle East, Central and South America, and 2% in Australia/Oceania
- Transition: That was culture and you can see the many ways that it can be used in an organization. Let’s take a brief look at The Denison Leadership Development Survey as well.
- This is an example of the circumplex report. You’ll notice that… (call out the things that may be of interest to this particular group)
- This is an example of a line item report. You will receive 4 line item reports – one for each trait: Mission, Adaptability, Involvement and Mission. You’ll see that they are color coded according to their trait. Each line item appears exactly as it does on the survey and your score is again represented as a percentile.
- The High-Low report displays the five highest and five lowest scores. These are color coded according to the trait to help you easily see patterns in the data.
- Transition: That was culture and you can see the many ways that it can be used in an organization. Let’s take a brief look at The Denison Leadership Development Survey as well.
- Say: The Denison Leadership Development Survey is a 360 degree survey tool that helps managers and leaders to: Identify specific areas of strength and weakness, and establish action plans for individual development Learn how specific management skills and practices impact leadership performance Develop leadership skills necessary to adapt to a changing environment Understand their roles in creating a high-performance culture in their organizations This tool is available as a full 360 or Denison also has an Individual Contributor version for those people who may not have direct reports but who are still in a leadership role.
- Say: As you can see, the leadership survey is based on the same Denison model but customized toward in individual’s performance. In this case, instead of “Do we know where we are going?” as an organization, the Mission quadrant asks “Do I know where I am going?” Similarly, for Adaptability: “Am I listening to the customer and the market place?” Involvement: “Am I aligning and engaging my people?” Consistency: “Can I execute?” In the Leadership survey, leaders typically invite 10-12 people to rate them, including bosses, peers, direct reports and others and they receive a personalized report comparing their self-scores to the combined raters and to each of the groups if there are enough responses. Denison requires at least three completed surveys in the peer, direct reports and other categories for a break out in that category. Bosses are displayed seperately.
- Say: Like the Denison Organizational Culture Survey, the Leadership Survey also uses a global normative benchmark. The benchmark consist of 11,953 leaders from over 800 companies. These leaders have been rated by over 184,000 bosses, peers and direct reports. Leaders come from a wide variety of industries, levels and functions.